A look into South Africa’s media future

While the publisher of UK newspapers, the Guardian and Observer, considers closing the print editions of those two media giants amid continuing financial losses, in South Africa, the picture is very different – for now.

This is according to data from professional services group PricewaterhouseCoopers (PwC).

According to an article in the UK Telegraph, under the headline: “Guardian ‘seriously discussing’ end to print edition,” senior figures at Guardian News & Media (GNM) are seriously considering the move to an entirely online operation.

Although the Guardian’s editor-in-chief, Alan Rusbridger is believed to be holding hope to keep the print side of the paper running for a while longer; Katherine Rushton, media, telecoms and technology editor at the Telegraph wrote that the trustees of the Scott Trust – GNM’s ultimate owner – are concerned that it does not have enough cash on its books to sustain the newspapers for that time period.

The Telegraph said that Guardian publisher has spent several years fighting to stem losses of £44 million a year. However, it has been slow to make savings and any money that it has clawed back has been spent on expanding its US and online operations.

“The investments helped to fuel a 16% increase in digital revenues to £45.7 million last year, but this was not enough to balance GNM’s operating losses which widened from £31.1 million,” the Telegraph said.

It reported that in 2011, GNM had looked at shutting down its £80 million printing plant: “However, it now seems more likely to stop running the presses altogether,” Rushton reported.

In South Africa, however, the total newspaper market rose by 5.7% in 2011 to R11.4 billion‚ according to PwC’s South African Entertainment & Media Outlook 2012-2016 report. This is due largely to strong growth in advertising spending, up 10.8%, the report stated.

PwC said that, although there was an increase in overall newspaper readership of about 7.7% in 2011‚ this was mainly thanks to more people reading the same copy.

The survey highlighted a decline of 6.7% in paid unit circulation.

PwC stressed that South Africa lagged behind more developed countries. “As broadband penetration increases‚ we can expect a decline in circulation in print newspapers. Because SA is still well behind other countries in broadband penetration‚ it will experience rapid broadband growth in the coming years,” said Vicky Myburgh‚ entertainment & media industries leader for PwC Southern Africa.

“Consequently‚ we expect steeper declines in newspaper unit circulation compared with most other countries.”

PwC opined that as the cost of accessing the internet declines and more people become digitally connected‚ they would eventually turn away from print newspapers.

The financial services group highlighted a trend towards tablets as a medium to source information. “Tablets are proving to be popular in SA and as prices come down‚ we expect penetration to expand,” it said.

PwC said that as this trend towards tablets increases, so would the potential market for paid digital circulation increase.

The report projected that by 2016 paid digital unit circulation will total 86‚000, from only 2‚000 in 2011.